Stocks End Down on Intel Downgrade
Stocks finished lower Monday, after analysts raised concerns about price wars darkening the earnings outlook for chipmaker Intel Corp. (INTC ).
Analysts at Lehman Brothers and Salomon Smith Barney said Intel will offer price cuts, perhaps much larger than anticipated, as a way to stimulate sales -- a move likely to eat into revenues and margins. Daniel Niles at Lehman Brothers, for example, noted price cuts for the high-end Pentium 4 chips will be slashed 50% beginning later this month. An Intel spokesman declined to comment, adding the company doesn't comment on analysts' reports or price-cut speculation. Shares of Intel lost more than 4%, and competitor Advanced Micro Devices Inc. (AMD ) was down more than 8%.
With traders already nervous about the tech sector, much attention will be focused on earnings results from tech bellwether Cisco Systems Inc. (CSCO ). The Internet equipment maker is scheduled to report numbers for the fourth quarter and 2001 fiscal year on Tuesday, Aug. 7.
Corporate earnings aside, data, offering clues about the health of the economy, also is expected later this week. Reports are due on second-quarter productivity, consumer credit for June, as well as the Producer Price Index for July, a closely-watched gauge of inflation.
The Dow Jones Industrial Average ended down 111.47 points, or 1.06%, to 10,401.31. The tech-heavy Nasdaq lost 32.07 points, or 1.55%, to 2,034.26. The broader S&P 500 Index was down 13.77 points, or 1.13%, to 1,200.58.
With no major economic data slated for release on Monday, U.S. Treasuries ended flat to modestly lower. The market also looked ahead to Tuesday's report on productivity.
European markets finished mixed. In London, the Financial Times-Stock Exchange 100 index was down 21.20 points, or 0.38%, to 5,526.40 on telecom weakness. In France, the CAC 40 gained 34.96 points, or 0.69%, to 5,066.25. And in Germany, the DAX Index was up 10.16 points, or 0.18%, to 5,746.04 on the strength of Deutsche Telekom.
In Asia, markets also ended on a mixed note. The Nikkei was relatively flat, up 1.93 points, or 0.02%, to 12,243.90. Gains in real estate and land transports were offset by losses in bank and tech shares. In Hong Kong, the market lost 120.27 points, or 0.98%, to 12,148.81.
By Heesun Wee in New York